Editorial: What will Apple do with the Macintosh?

After a decade of significant growth, Apple's Mac sales have flattened out as the larger market for PCs has begun to collapse. What future is there in the Mac business, and why is the company now designing a new Mac Pro?

Apple's recent history with iOS has been nothing short of unprecedented and incredible. The iPhone has sold so well that critics have all shifted from complaining that Steve Jobs was unrealistically optimistic when he said he hoped Apple could account for 1 percent of all phones sold within its second year to a complete 180, demanding that the company make a cheaper model capable of eating up the portion of sales in developing countries that Apple doesn't already dominate.

And at the same time, Wall Street is now "concerned" that too many people are choosing to buy the more affordable, two and a half year old iPhone 4. There's no worries, of course, that Android licensees, including Samsung, have been achieving their market share numbers largely by selling not just outdated hardware but outdated versions of Android, too, at much lower profit margins than Apple has been earning.

While Apple's success with iOS gives it the luxury of being cursed for not having cheap enough products and at the same time lamented for not selling a mix favoring more expensive models, its Mac business is simply plugging along as the only PC maker left that isn't losing its sales to iPad. IDC noted that global PC sales fell 14 percent in the first quarter of 2013, twice the drop it had predicted.

Unlike the iPhone, Apple can't simply sell 2 year old Mac designs at a subsidized discount to a hungry audience. Apple released the cheaper Mac mini in 2005 without stoking intense new demand. The majority of Apple's Mac sales are notebooks, all of which are now premium models precision crafted from thin wedges of aluminum. Compared to iPods, iPhones and iPads, Apple's Mac sales volumes are relatively minimal.

But Apple's Macs are premium machines in an industry that has been specializing in low end, disposable hardware for decades. This has allowed Apple to collect the lion's share of profits in the PC industry. According to a report by Asymco, Apple's Mac generates more profits that the top five PC makers combined.

Source: Asymco

From All-Mac to Also-Mac

It's not hard to see why Apple has been focusing much of its attention on mobile devices: that's where the money is. At the beginning of 2001, the year the iPod debuted, Apple announced winter quarter sales of just 659,000 Macs. Five years later, Apple was up to selling about twice as many Macs (1.254 million) but was now selling more than 14 million iPods, too.

The tremendous success of the iPod caused some pundits to speculate that Apple would (or perhaps should) drop the Mac and focus on just selling iPods. What they didn't know was that Apple was planning to use Mac technologies to develop an iPod successor.

Five years later at the start of 2010, Apple reported sales of 3.36 million Macs, 21 million iPods and 8.7 million new iPhones. It then released the new iPad.

Three years later (just last week) Apple announced sales of just under 4 million Macs, 37.4 million iPhones and 19.5 million iPads. That's nearly 57 million iOS devices (not including iPod touch) being sold per quarter, far outpacing Macs.

Same but different

Of course, iOS devices are actually compact Macs, sharing a nearly identical core os, development frameworks and app code (including their Safari WebKit browser). What's different is the user interface: Macs use an advanced version of the windowing, mouse-driven environment it debuted with back in 1984. In 2007, Apple introduced a new multitouch user interface designed expressly for handheld mobile devices.

Over the past few years, Apple has cross pollinated the Mac and iOS devices, introducing many common user interface and usability concepts ranging from multitouch gestures and Dictation to an App Store for desktop software. Apple's next big push in services, iCloud, appeared with support for both Macs and iOS.

Despite sharing lots of technology and features between the Mac and iOS, Apple hasn't pursued Microsoft's strategy of melding its desktop and mobile device platforms with a common, hybrid user interface. Instead, the Mac has remained a conventional computer without a touchscreen. How long can Apple afford to devote significant resources to maintaining the Mac when there's so much more opportunity for growth and revenues on the iOS side?

Mac Pro now a fraction of the Mac's fraction

Macs have steadily become more mobile. Over the past decade, desktop Macs have shrunk from the majority of Apple's computer sales, to being tied with notebooks, to now being a small minority. Most of Apple's desktop Macs are iMacs, leaving its Mac Pro a tiny island within quarterly sales of around 4 million machines.

As a workstation class system, the Mac Pro now makes up such a small percentage of Apple's Mac sales that it hasn't been significantly updated since 2010. And in Europe, sales have ceased entirely because the existing design no longer meets stringent manufacturing standards related to exposed fan blades and other features.

If Apple's chief executive Tim Cook hadn't already promised an update to the company's full sized desktop this year, it would be very believable to think it might just ride into the sunset with the discontinued Xserve.

Franz,

Thanks for your email. Our Pro customers like you are really important to us. Although we didnt have a chance to talk about a new Mac Pro at todays event, dont worry as were working on something really great for later next year [2013]. We also updated the current model today.

Weve been continuing to update Final Cut Pro X with revolutionary pro features like industry leading multi-cam support and we just updated Aperture with incredible new image adjustment features.

We also announced a MacBook Pro with a Retina Display that is a great solution for many pros.

Tim

Unlike the Xserve, which was speculatively designed to serve a market that was already well served, the Mac Pro (and before that, the Power Mac) was built for Apple's mainstream desktop professional users. Over the past decade however, a number of shifts in technology have enabled more and more of the Mac Pro's potential audience to be better served by speedy notebooks with large displays or, in some cases, the simplicity of the iMac.

The central core audience of Apple's power users, including professionals in print, audio and video production as well as science and engineering, are often still looking for more computing power than a notebook can deliver. Rather than beefing up the iMac to accommodate such users, Apple made it more stylish and thin last fall.

This has left a place open for a future new Mac Pro, even if its target demographic is relatively small. Apple could seek to broaden the appeal of the desktop computer, or it can instead simply deliver a really high end, attention getting workstation just for bragging rights. Apple did something similar last fall when it introduced the Retina Display MacBook Pro, an extremely high end luxury notebook that was so expensive that it needed last year's models to stick around in order to provide more affordable alternatives.

If you're taking note, that's the same pricing strategy Apple used with iPhone 5 and the new iPod touch, both of which are accompanied by a year or two of previous models serving as cheaper options.